AUD Regaining The Week's Earlier Losses

AUD

The Australia Dollar is up across the board, supported by an improving risk appetite overnight. Asian equities were also enjoying the improved trading conditions with the ASX up 1.1%, the Shanghai Comp up 1.2% and the NIKKEI the standout performer making gains of 3.9%. Yesterday's local data showed the MI Inflation Expectations printing at 4.9%, a little above previous expectation of 4.6%, adding to the mild AUD positivity. Commodities however went the other way, capping any AUD gains. Gold fell slightly by -0.1%, Silver down -0.3% and Iron Ore making incremental gains of 0.2%. No major Aussie data releases expected for today, although the RBA’s Governor Philip Lowe is currently speaking at the Banking 2022 Conference in Sydney.

USD

The Aussie has regained yesterday's lost ground and then some, comfortably regaining the 0.73 handle and currently trading at 0.7360. Overnight we witnessed a slew of US data releases; CPI m/m came in as projected at 0.8%, up against the previous of 0.6%, reflecting higher gasoline, food and shelter costs. Core CPI m/m performing very similarly at 0.5% matching expectations and just short of previous 0.6%. Unemployment Claims a little worse at 227K against a forecast of 220K and a previous of 216K. While Natural Gas Storage saw a bit of a recovery at -124B against expected -116B and last releases’ -139B. The 30-y Bond Auction yielded 2.38|2.5 against previous of 2.34|2.3, while the Federal Budget Balance slightly better at -216.6B than the projection of -213.0B, with a significant difference from a previous of 118.7B. In US Equities the NASDAQ fell -1.0%, S&P 500 was down -0.5% and DOW JONES suffered worse down -0.4%. Crude Oil was down -2.0%, while Natural Gas continued plummeting by -20.5% as alternative sources of Russian energy are considered. Looking ahead the US Federal Reserve is widely expected to raise interest rates by at least 25 basis points next week, with predictions of even larger hikes in the coming months if inflation persists. With that said, some do criticize the move as too hasty as recommending a halt on monetary policy changes for at least the next several months as the events unfolding in Ukraine leave the risk of future of possible inflation increases uncertain.

EUR

AUD higher here as well, trading at a rate of 0.6686 at time of writing after risk appetite improved in the early hours of the morning. At last night's all important ECB meeting, held against the backdrop of the war in Ukraine, the ECB left the interest rate unchanged which was no shock to anyone. The accompanying statement highlighted that inflation was expected to peak in 2022 at 5.1% vs 3.2% previously, with increasing likelihood for inflation to settle around 2% in 2024 in all scenarios. Christine Lagarde also elaborated on the Russia/Ukraine war, stating that it presented a substantial risk to future increases in inflation. Whilst EUR strengthened in the initial aftermath of the ECB meeting, this was quickly reversed as AUD dominated in an improving risk environment. In Equities the DAX continued to bleed losing another -2.9%. In more Russian news; Russian foreign minister Lavrov warned those that choose to supply weapons to Ukraine of repercussions as well as saying that there is more preparation required before Putin and Zelenskiy can meet.  Looking ahead we will see the release of the German Final CPI m/m tonight followed by the Italian Quarterly Unemployment Rate.

GBP

The AUDGBP pair bound back after 3 days of choppy losses, the new day reinvigorating the Aussie against the Sterling climbing to 0.5616 at time of writing. No data out of the UK yesterday, and the FTSE suffered similarly to others down -1.3%. We will observe a number of data sets later tonight from the UK in the form of Construction Output m/m, GDP m/m, Industrial Production m/m, Manufacturing Production m/m and Goods Trade Balance, yet none of which are expected the have a major impact on the market. 

NZD

The Aussie fairs better against its little cousin across the ditch finding support at 1.0652 bounding back to 1.0719 at time of writing. Little data out of the NZ with only the Business Manufacturing Index and FPI to see out of their local market.